Allegheny Energy Reports Third Quarter Results.GREENSBURG Greensburg, city (1990 pop. 16,318), seat of Westmoreland co., SW Pa.; settled c.1770, inc. as a city 1928. Located in a coal area, the city manufactures concrete, chemicals, machinery, and metal products. Col. , Pa. -- Allegheny Energy Allegheny Energy (NYSE: AYE) is a traditional public utility based in the Pittsburgh suburb of Greensburg. It services communities in Western Pennsylvania, Western Maryland, Northern West Virginia, Northwest Virginia. , Inc. (NYSE NYSE See: New York Stock Exchange :AYE AYE Allegheny Energy, Inc. (stock symbol) AYE Ayer Rajah Expressway AYE Amplifying Your Effectiveness (conference) ) today reported a net loss of $376.8 million, or $2.40 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the third quarter of 2004, compared with a net loss of $51.0 million, or a loss of $0.40 per diluted share, in the third quarter of 2003. Third quarter results for 2004 include $427.5 million in losses from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. due principally to charges taken for assets held for sale. Allegheny Energy reported third quarter 2004 income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $50.6 million, or $0.37 per diluted share, compared with a loss from continuing operations in the third quarter 2003 of $46.8 million, or a loss of $0.37 per diluted share. "As expected, our core business returned to profitability in the third quarter. Our power plants performed well, and we benefited from continued cost reductions and lower interest expense," said Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. J. Evanson, Chairman, President and Chief Executive Officer. "In the third quarter, we also recognized non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. on the sale or impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of certain non-strategic assets, as we continued to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution on our plan to reduce debt and build a more focused company." To provide a better understanding of Allegheny Allegheny (ăl`əgā'nē, ăl`əgä'nē), river, 325 mi (523 km) long, rising in N central Pa., and flowing NW into N.Y., then SW through Pa. Energy's core results and trends, Allegheny Energy also reported adjusted financial results, which are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures and results reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). is attached to this release. Third Quarter Adjusted Results Allegheny Energy's income from continuing operations before income taxes and minority interest was $70.8 million for the third quarter of 2004, an increase of $39.1 million compared to adjusted income from continuing operations before income taxes and minority interest for the same period in 2003. Among the factors contributing to the results were: --Operations and maintenance expense decreased by $20.0 million from the third quarter of 2003, primarily due to reduced spending on outside services. --Interest expense decreased by $24.8 million from the prior year third quarter, primarily due to lower borrowing rates and lower average debt outstanding. Earnings from continuing operations before interest, taxes, depreciation and amortization (adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) for the third quarter 2004 were $243.2 million, an increase of $17.9 million from the third quarter 2003. EBITDA is a non-GAAP financial measure. For a reconciliation of EBITDA to GAAP financial measures and details on the calculation of EBITDA, see the reconciliation of non-GAAP financial measures attached to this release. Third Quarter Segment Results Delivery and Services: The Delivery and Services segment reported income from continuing operations of $30.2 million for the third quarter of 2004, virtually unchanged from the same quarter in the prior year. The segment's operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. increased by $20.7 million, primarily due to increased retail electric revenues from higher residential and commercial sales as a result of greater usage. The higher revenue was offset by higher purchased energy expense. Generation and Marketing: The Generation and Marketing segment reported income from continuing operations of $16.2 million for the third quarter of 2004, compared to a loss of $82.6 million for the same period in 2003. The segment's operating revenues increased by $119.2 million primarily due to reduced losses as a result of Allegheny Energy's exit from Western energy markets. Interest expense for the Generation and Marketing segment in the third quarter decreased by $23.3 million due to lower borrowing rates and lower average debt outstanding. Discontinued Operations For the third quarter of 2004, the $427.5 million consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net loss from discontinued operations includes a non-cash asset impairment charge of $209.4 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ($129.2 million after tax) from the previously announced sale of the Lincoln Lincoln, city and district, England Lincoln, city (1991 pop. 79,980) and district, Lincolnshire, E England, in the Parts of Kesteven, on the Witham River. generating facility; a non-cash asset impairment charge of $35.1 million pre-tax ($20.7 million after tax) associated with the previously announced agreement to sell the West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. natural gas operations; and non-cash asset impairment charges of $445.4 million pre-tax ($274.7 million after tax) as a result of the previously announced decision to sell the Gleason Glea·son , Herbert John Known as "Jackie." 1916-1987. American entertainer best remembered for his portrayal of Ralph Kramden on the television comedy The Honeymooners (1952-1957). and Wheatland Wheatland can refer to several things: Places
adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. loss of $2.9 million from operating results at these units. Nine-Month Consolidated Results For the first nine months of 2004, Allegheny Energy reported a consolidated net loss of $383.0 million, or $2.97 per diluted share, compared with a consolidated net loss of $341.3 million, or $2.69 per diluted share, for the first nine months of 2003. The results for the first nine months of 2004 included $431.5 million in losses from discontinued operations, and the first nine months 2003 results included losses of $17.3 million from discontinued operations. Allegheny Energy's income from continuing operations for the first nine months of 2004 was $48.5 million, or $0.38 per diluted share, compared to a loss from continuing operations of $303.3 million, or a loss of $2.39 per diluted share, in the first nine months of 2003. The 2003 loss was primarily due to Allegheny Energy's participation in Western energy markets, which it exited in 2003. A summary of nine-month results by business segment is included in the attached financial tables. Reconciliation of Non-GAAP Financial Measures This news release and the attached tables include non-GAAP financial measures as defined in the Securities and Exchange Commission's Regulation G. Where noted, we present certain financial information on an adjusted basis to exclude the effect of certain items as described herein. By presenting adjusted results, management intends to provide investors with a better understanding of the core results and underlying trends from which to consider past performance and prospects for the future. We also present EBITDA as an additional measure of our operating performance. Users of this financial information should consider the types of events and transactions for which adjustments have been made. Neither the adjusted information nor EBITDA should be considered in isolation or viewed as substitutes for or superior to net income or other data prepared in accordance with GAAP as measures of our operating performance or liquidity. In addition, neither the adjusted information nor EBITDA are necessarily comparable to similarly titled measures provided by other companies. Pursuant to the requirements of Regulation G, we have attached tables that reconcile non-GAAP financial measures, including those presented in this release, to the most directly comparable GAAP measures. Analyst Conference Call Allegheny Energy will comment further on these results in an analyst conference call on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November November: see month. 5, at 9:30 a.m. Eastern Standard Time. To listen to a live Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the broadcast of the call, visit www.alleghenyenergy.com. A taped replay of the call will be available after the live broadcast. Allegheny Energy Headquartered in Greensburg, Pa., Allegheny Energy is an energy company consisting of two major businesses, Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric service to customers in Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York , West Virginia, Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). , Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). and Ohio. More information about Allegheny Energy is available at www.alleghenyenergy.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. In addition to historical information, this release contains a number of "forward-looking statements" as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These include statements with respect to: regulation and the status of retail generation service supply competition in states served by Allegheny Energy's delivery business, Allegheny Power; results of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; financing plans; demand for energy and the cost and availability of inputs; demand for products and services; capacity purchase commitments; results of operations; capital expenditures; regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. matters; internal controls and procedures and accounting issues; and stockholder rights plans. Forward-looking statements involve estimates, expectations, and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Factors that could cause actual results to differ materially include, among others, the following: execution of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activity and liquidity enhancement plans; complications or other factors that render (1) To make visible; to draw. The term comes from the graphics world where a rendering is an artist's drawing of what a new structure would look like. In computer-aided design (CAD), a rendering is a particular view of a 3D model that has been converted into a realistic image. it difficult or impossible to obtain necessary lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. consents or regulatory authorizations on a timely basis; general economic and business conditions; changes in access to capital markets; the continuing effects of global instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability , terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. , and war; changes in industry capacity, development, and other activities by Allegheny's competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; changes in the weather and other natural phenomena; changes in technology; changes in the price of power and fuel for electric generation; the results of regulatory proceedings, including those related to rates; changes in the underlying inputs, including market conditions, and assumptions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny, its markets, or its activities; environmental regulations; the loss of any significant customers and suppliers; the effect of accounting policies issued periodically by accounting standard-setting bodies; additional collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although calls; and changes in business strategy, operations, or development plans. Additional risks and uncertainties are identified and discussed in Allegheny Energy's reports filed with the Securities and Exchange Commission.
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------
2004 2003 2004 2003
-----------------------------------------
Operating revenues $723,279 $603,163 $2,067,624 $1,515,630
Operating expenses:
Fuel consumed in electric
generation 163,136 160,635 465,940 451,735
Purchased power and
transmission 85,926 81,941 246,816 249,526
Deferred energy costs,
net (1,688) (1,554) 435 763
Operations and
maintenance 190,213 210,203 623,855 773,829
Depreciation and
amortization 75,057 75,887 222,894 212,704
Taxes other than income
taxes 51,552 47,099 149,665 147,904
-----------------------------------------
Total operating
expenses 564,196 574,211 1,709,605 1,836,461
-----------------------------------------
Operating income (loss) 159,083 28,952 358,019 (320,831)
Other income, net 3,115 15,093 15,598 96,454
Interest expense and
preferred dividends:
Interest expense 90,112 114,875 300,978 306,542
Preferred dividend
requirements of
subsidiary 1,259 1,259 3,778 3,778
-----------------------------------------
Total interest expense
and preferred dividends 91,371 116,134 304,756 310,320
-----------------------------------------
Income (loss) from continuing
operations before income
taxes and minority interest 70,827 (72,089) 68,861 (534,697)
Income tax expense (benefit)
from continuing operations 26,126 (23,711) 25,196 (222,298)
Minority interest in net loss
of subsidiaries (5,943) (1,537) (4,804) (9,122)
-----------------------------------------
Income (loss) from continuing
operations 50,644 (46,841) 48,469 (303,277)
Loss from discontinued
operations, net of tax (427,487) (4,156) (431,489) (17,283)
-----------------------------------------
Loss before cumulative effect
of accounting changes (376,843) (50,997) (383,020) (320,560)
Cumulative effect of
accounting changes, net of
taxes of $12,974 -- -- -- (20,765)
-----------------------------------------
Net loss $(376,843)$(50,997) $(383,020) $(341,325)
=========================================
Basic income (loss) per
common share:
Income (loss) from
continuing operations $0.40 $(0.37) $0.38 $(2.39)
Loss from discontinued
operations, net (3.36) (0.03) (3.40) (0.14)
Cumulative effect of
accounting changes, net -- -- -- (0.16)
-----------------------------------------
Net loss per common share $(2.96) $(0.40) $(3.02) $(2.69)
=========================================
Diluted income (loss) per
common share:
Income (loss) from
continuing operations $0.37 $(0.37) $0.38 $(2.39)
Loss from discontinued
operations, net (2.77) (0.03) (3.35) (0.14)
Cumulative effect of
accounting changes, net -- -- -- (0.16)
-----------------------------------------
Net loss per common share $(2.40) $(0.40) $(2.97) $(2.69)
=========================================
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
----------------------
2004 2003
----------------------
Cash Flows From Operating Activities:
Net loss $(383,020) $(341,325)
Adjustments for discontinued operations and
noncash charges and (credits):
Loss from discontinued operations, net 431,489 --
Cumulative effect of accounting changes,
net -- 20,765
Reapplication of SFAS No. 71 -- (75,824)
Depreciation and amortization 222,894 243,124
(Gain) loss on asset sales and disposals (12,262) 21,334
Minority interest (4,804) (9,122)
Deferred investment credit and income
taxes, net 21,525 (159,600)
Unrealized losses on commodity contracts,
net 10,735 483,811
Other, net 69,337 (9,274)
Changes in certain assets and liabilities:
Accounts receivable, net 34,315 159,304
Materials and supplies 9,622 (38,163)
Taxes receivable/accrued, net (16,886) 181,433
Prepaid taxes (12,132) (16,252)
Collateral deposits (60,655) (59,238)
Accounts payable (20,605) (40,025)
Interest accrued 28,939 22,447
Purchased options (1,583) 10,053
Commodity contract termination costs (259) (47,706)
Other, net 15,183 (24,195)
----------------------
Net cash from operating
activities 331,833 321,547
----------------------
Cash Flows Used In Investing Activities:
Capital expenditures (199,238) (205,604)
Acquisition of electric generating
facility -- (318,435)
Proceeds from sale of businesses and
assets 14,070 55,894
Decrease (increase) in restricted funds 8,305 (34,175)
Other investments 2,123 9,150
----------------------
Net cash used in investing activities (174,740) (493,170)
----------------------
Cash Flows (Used in) From Financing Activities:
Net repayments of short-term debt (53,610)(1,131,966)
Issuance of long-term debt 1,594,921 2,317,257
Retirement of long-term debt (1,994,315) (417,797)
----------------------
Net cash (used in) from financing
activities (453,004) 767,494
----------------------
Net (decrease) increase in cash and cash
equivalents (295,911) 595,871
Cash and cash equivalents at beginning of period 528,612 204,231
----------------------
Cash and cash equivalents at end of period $232,701 $800,102
======================
Supplemental cash flow information:
Cash paid for interest $244,813 $264,899
======================
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, December 31,
2004 2003
-----------------------------
ASSETS
Current Assets:
Cash and cash equivalents $232,701 $528,612
Accounts receivable:
Customer 168,594 203,801
Unbilled utility revenues 120,506 172,891
Wholesale and other 47,296 46,257
Allowance for uncollectible
accounts (20,564) (29,329)
Materials and supplies 102,209 109,651
Fuel, including stored gas 44,626 98,097
Deferred income taxes 42,634 44,610
Prepaid taxes 54,129 46,405
Assets held for sale 128,778 --
Collateral deposits 111,830 51,175
Commodity contracts 21,828 24,390
Restricted funds 36,722 120,873
Regulatory assets 36,697 68,665
Other 20,099 31,186
-----------------------------
Total current assets 1,148,085 1,517,284
-----------------------------
Property, Plant and Equipment:
Generation 5,617,289 6,597,195
Transmission 1,006,984 1,010,062
Distribution 3,326,694 3,549,813
Other 463,454 525,092
Accumulated depreciation (4,280,753) (4,377,917)
-----------------------------
Subtotal 6,133,668 7,304,245
Construction work in progress 174,992 149,232
-----------------------------
Total property, plant and
equipment 6,308,660 7,453,477
-----------------------------
Investments and Other Assets:
Assets held for sale 508,353 --
Goodwill 367,287 367,287
Investments in unconsolidated
affiliates 30,562 51,479
Intangible assets 34,604 41,710
Other 45,634 45,007
-----------------------------
Total investments and other
assets 986,440 505,483
-----------------------------
Deferred Charges:
Commodity contracts 4,829 5,536
Regulatory assets 569,039 577,691
Other 63,548 112,425
-----------------------------
Total deferred charges 637,416 695,652
-----------------------------
Total Assets $9,080,601 $10,171,896
=============================
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(in thousands)
(unaudited)
September 30, December 31,
2004 2003
-----------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $-- $53,610
Long-term debt due within one year 388,496 544,843
Accounts payable 234,233 281,514
Accrued taxes 72,624 98,227
Commodity contracts 53,450 41,486
Regulatory liabilities 557 2,229
Liabilities associated with assets
held for sale 17,122 --
Other 237,931 259,034
-----------------------------
Total current liabilities 1,004,413 1,280,943
-----------------------------
Long-term Debt 4,823,501 5,127,437
Deferred Credits and Other Liabilities:
Commodity contracts 59,446 61,125
Investment tax credit 85,091 89,826
Deferred income taxes 616,106 860,323
Obligations under capital leases 26,295 32,483
Regulatory liabilities 446,735 436,118
Adverse power purchase commitments 205,560 218,105
Liabilities associated with assets
held for sale 104,864 --
Other 477,834 462,220
-----------------------------
Total deferred credits and other
liabilities 2,021,931 2,160,200
-----------------------------
Minority Interest 20,732 13,457
Preferred Stock of Subsidiary 74,000 74,000
Common Stockholders' Equity:
Common stock 159,079 158,761
Other paid-in capital 1,453,665 1,447,830
Retained (deficit) earnings (380,111) 2,910
Treasury stock (1,438) (1,438)
Accumulated other comprehensive loss (95,171) (92,204)
-----------------------------
Total common stockholders'
equity 1,136,024 1,515,859
-----------------------------
Total Liabilities and Stockholders'
Equity $9,080,601 $10,171,896
=============================
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
RESULTS BY BUSINESS SEGMENT
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
(In millions) 2004 2003 2004 2003
----------------------------------------------------------------------
Total operating revenues:
Delivery and Services $689.3 $668.6 $2,069.2 $2,027.3
Generation and Marketing 410.7 291.5 1,157.3 600.8
Eliminations (376.7) (356.9) (1,158.9)(1,112.5)
---------------------------------------
Total $723.3 $603.2 $2,067.6 $1,515.6
=======================================
Operating income (loss):
Delivery and Services $72.5 $65.9 $215.5 $179.2
Generation and Marketing 79.7 (44.9) 139.5 (495.7)
Eliminations 6.9 8.0 3.0 (4.3)
---------------------------------------
Total $159.1 $29.0 $358.0 $(320.8)
=======================================
Interest expense:
Delivery and Services $30.6 $32.1 $94.5 $91.5
Generation and Marketing 59.6 82.8 206.5 215.0
Eliminations (0.1) -- -- --
---------------------------------------
Total $90.1 $114.9 $301.0 $306.5
=======================================
Income (loss) from continuing
operations:
Delivery and Services $30.2 $30.9 $83.5 $74.9
Generation and Marketing 16.2 (82.6) (36.8) (375.4)
Eliminations 4.3 4.9 1.8 (2.7)
---------------------------------------
Total $50.7 $(46.8) $48.5 $(303.2)
=======================================
(Loss) income from discontinued
operations, net:
Delivery and Services $(25.2) $(1.7) $(15.3) $7.9
Generation and Marketing (402.3) (2.5) (416.2) (25.2)
Eliminations -- -- -- --
---------------------------------------
Total $(427.5) $(4.2) $(431.5) $(17.3)
=======================================
Cumulative effect of accounting
changes, net:
Delivery and Services $-- $-- $-- $(1.2)
Generation and Marketing -- -- -- (19.6)
Eliminations -- -- -- --
---------------------------------------
Total $-- $-- $-- $(20.8)
=======================================
Net income (loss):
Delivery and Services $5.0 $29.2 $68.2 $81.6
Generation and Marketing (386.1) (85.1) (453.0) (420.2)
Eliminations 4.3 4.9 1.8 (2.7)
---------------------------------------
Total $(376.8) $(51.0) $(383.0) $(341.3)
=======================================
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
INCOME FROM
CONTINUING
OPERATIONS
BEFORE INCOME
TAXES AND DILUTED
THREE MONTHS ENDED MINORITY NET (LOSS) (LOSS) INCOME
SEPTEMBER 30, 2004 INTEREST INCOME PER SHARE
----------------------------------------------------------------------
Calculation of Income
(Loss) As Adjusted:
Income (Loss) - GAAP
basis $70.8 $(376.8) $(2.40)
==============
Adjustments:
Loss from discontinued
operations 427.4
--------------------------------------------------------
As Adjusted $70.8 $50.6 $0.37
======================================================================
Calculation of EBITDA As
Adjusted:
Net Loss - GAAP basis $(376.8)
Interest expense and
preferred dividends 91.4
Income tax expense 26.1
Depreciation and
amortization 75.1
--------------------------------------------------------
EBITDA (184.2)
Loss from discontinued
operations 427.4
--------------------------------------------------------
Adjusted EBITDA $243.2
========================================================
(LOSS) INCOME
FROM CONTINUING
OPERATIONS
BEFORE INCOME
TAXES AND DILUTED
THREE MONTHS ENDED MINORITY NET (LOSS) (LOSS) INCOME
SEPTEMBER 30, 2003 INTEREST INCOME PER SHARE
----------------------------------------------------------------------
Calculation of Loss As
Adjusted:
Loss - GAAP basis $(72.1) $(51.0) $(0.40)
==============
Adjustments:
Loss from discontinued
operations 4.2
Losses on West Book and
other exited trading
activities(1) 113.3 66.2
Gain on land sale(2) (9.5) (5.6)
--------------------------------------------------------
As Adjusted $31.7 $13.8 $0.11
======================================================================
Calculation of EBITDA As
Adjusted:
Net Loss - GAAP basis $(51.0)
Interest expense and
preferred dividends 116.1
Income tax benefit (23.7)
Depreciation and
amortization 75.9
--------------------------------------------------------
EBITDA 117.3
Loss from discontinued
operations 4.2
Losses on West Book and
other exited trading
activities 113.3
Gain on land sale (9.5)
--------------------------------------------------------
Adjusted EBITDA $225.3
========================================================
FOOTNOTES:
(1) This amount is included in Operating revenues on the Consolidated
Statement of Operations.
(2) This amount is included in Other income, net, on the Consolidated
Statement of Operations.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share data)
(unaudited)
INCOME FROM
CONTINUING
OPERATIONS
BEFORE INCOME
TAXES AND DILUTED
NINE MONTHS ENDED MINORITY NET (LOSS) (LOSS) INCOME
SEPTEMBER 30, 2004 INTEREST INCOME PER SHARE
----------------------------------------------------------------------
Calculation of Income
(Loss) As Adjusted:
Income (Loss) - GAAP
basis $68.9 $(383.0) $(2.97)
==============
Adjustments(1):
Gain on California
contract escrow
release(2) (68.1) (39.2)
Write-off of 2003
financing costs(3) 14.1 8.1
Gain on land sale, New
York office space charge
(net)(4) (4.2) (2.4)
Loss on release of gas
pipeline capacity(5) 11.7 6.7
Loss from discontinued
operations 431.5
--------------------------------------------------------
As Adjusted $22.4 $21.7 $0.17
======================================================================
Calculation of EBITDA As
Adjusted:
Net Loss - GAAP basis $(383.0)
Interest expense and
preferred dividends 304.8
Income tax expense 25.2
Depreciation and
amortization 222.9
--------------------------------------------------------
EBITDA 169.9
Gain on California
contract escrow release (68.1)
Gain on land sale, New
York office space charge
(net) (4.2)
Loss on release of gas
pipeline capacity 11.7
Loss from discontinued
operations 431.5
--------------------------------------------------------
Adjusted EBITDA(1) $540.8
========================================================
LOSS FROM
CONTINUING
OPERATIONS
BEFORE INCOME
TAXES AND DILUTED
NINE MONTHS ENDED MINORITY LOSS PER
SEPTEMBER 30, 2003 INTEREST NET LOSS SHARE
----------------------------------------------------------------------
Calculation of Loss As
Adjusted:
Loss - GAAP basis $(534.7) $(341.3) $(2.69)
==============
Adjustments(6):
Gain on SFAS 71(7) (75.8) (43.5)
Loss on assets
retired/held for sale(4) 37.5 21.5
Special termination and
other benefits(8) 15.7 9.0
Impairment of New York
office(8) 4.6 2.6
Losses on West Book and
other exited trading
activities(2) 434.9 254.0
Baltimore Gas & Electric
contract termination
costs(8) 32.0 18.4
Gain on land sale(7) (9.5) (5.6)
Other(8) & (9) 12.6 7.2
Cumulative effect of
accounting changes 20.7
Loss from discontinued
operations 17.3
--------------------------------------------------------
As Adjusted $(82.7) $(39.7) $(0.31)
======================================================================
Calculation of EBITDA As
Adjusted:
Net Loss - GAAP basis $(341.3)
Interest expense and
preferred dividends 310.3
Income tax benefit (222.3)
Depreciation and
amortization 212.7
--------------------------------------------------------
EBITDA (40.6)
Gain on SFAS 71 (75.8)
Loss on assets
retired/held for sale 37.5
Special termination and
other benefits 15.7
Impairment of New York
office 4.6
Losses on West Book and
other exited trading
activities 434.9
Baltimore Gas & Electric
contract termination
costs 32.0
Gain on land sale (9.5)
Other(9) 12.6
Cumulative effect of
accounting changes 20.7
Loss from discontinued
operations 17.3
--------------------------------------------------------
Adjusted EBITDA(6) $449.4
========================================================
FOOTNOTES:
(1) Not adjusted for $9.2 million of charges related to Allegheny
Ventures for write-downs of inventory and discontinued product
($4.3 million), equity interests ($2.3 million) and adjustments in
revenue recognition for a percentage of completion contract ($2.6
million).
(2) These amounts are included in Operating revenues on the
Consolidated Statements of Operations.
(3) This amount is included in Interest expense on the Consolidated
Statement of Operations.
(4) These amounts are included in Operations and maintenance expense
and Other income, net, on the Consolidated Statements of
Operations.
(5) This amount is included in Purchased power and transmission on the
Consolidated Statement of Operations.
(6) Not adjusted for estimated energy trading losses totaling $34.9
million. These losses were primarily the result of trading
activities in the Western United States energy markets, which
Allegheny exited in 2003.
(7) These amounts are included in Other income, net, on the
Consolidated Statement of Operations.
(8) These amounts are included in Operations and maintenance expense
on the Consolidated Statement of Operations.
(9) Charges related to the St. Joseph's generating plant lease ($2.0
million), additional Enron litigation reserves ($7.0 million) and
additional costs attributable to asset sales ($3.6 million).
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
Unaudited
---------
Three Months Ended
September 30,
2004 2003 Change
--------- --------- -------
Delivery and Services:
Electricity sales (million kilowatt-hours) 11,683 11,547 1.2%
Usage per customer (kilowatt-hours):
Residential 2,869 2,831 1.3%
Commercial 15,696 15,629 0.4%
Industrial 187,088 187,250 (0.1%)
Natural gas sales (million cubic feet) 1,558 1,799 (13.4%)
Generation and Marketing:
Generation (million kilowatt-hours) 12,479 12,550 (0.6%)
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